<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 6-K
REPORT OF FOREIGN ISSUER
PURSUANT TO RULE 13A-16 OR 15D-16 OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE MONTH OF AUGUST, 1998
TRINITY BIOTECH PLC
(TRANSLATION OF REGISTRANT'S NAME INTO ENGLISH)
IDA BUSINESS PARK,
BRAY,
CO. WICKLOW, IRELAND
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICERS)
<PAGE> 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
GENERAL
Trinity Biotech plc ("Trinity" or the "Company") develops, manufactures and
markets diagnostic test kits used for the clinical laboratory, point-of-care
("POC"), and self-testing ("OTC") segments of the diagnostic market. The
Company's rapid tests provide fast and accurate results designed for home (OTC)
and doctor's office (POC) use. In addition, the Company manufactures and
markets a range of diagnostic test kits used in clinical laboratories to detect
infectious diseases and autoimmune disorders. The Company markets over 90
different diagnostic tests in 65 countries.
Trinity was incorporated in Ireland in January 1992. The Company was organised
to acquire, develop and market technologies for rapid in vitro blood and saliva
diagnostics for HIV and other infectious diseases. In October 1992 Trinity
completed an initial public offering in the United States in which it raised
net proceeds in excess of L.2.8 million. In October 1993, Trinity took a
controlling interest in DDI and in October 1994 merged Trinity's wholly-owned
subsidiary into DDI so that DDI became a wholly owned subsidiary of Trinity.
DDI was the surviving entity in the merger and was subsequently renamed Trinity
Biotech Inc ("TBI"). In December 1994 Trinity acquired the remaining 50% of
FHC which its subsidiary TBI did not own. In 1995 Trinity raised net proceeds
of $7 million as a result of a private placement of the Company's shares. In
February 1997 Trinity acquired all the outstanding share capital of Clark
Laboratories Inc., ("Clark"), based in Jamestown, New York. In June 1997,
Trinity signed an agreement to purchase Centocor UK Holdings Limited
("Centocor"), a company based in Guildford in the U.K. Centocor was a 100%
subsidiary of Centocor, Inc., a U.S. biotechnology company. In July 1998,
Trinity purchased the Microzyme product line for hormones and drugs of abuse
tests from from Diatech Inc, a Boston based diagnostics company. The group
financial statements include the attributable results of TBI and of its
subsidiary FHC, which is engaged in marketing pregnancy tests to the over the
counter market, and the results of Clark and Trinity Biotech UK Ltd (formerly
Centocor UK Ltd) for the six months ended June 30, 1998.
The following discussion should be read in conjunction with the unaudited
condensed interim Financial Statements and notes thereto. The financial
statements have been prepared in accordance with Irish generally accepted
accounting principals, which conform in all material respects to US GAAP
except as indicated in the notes to the condensed Financial Statements.
RESULTS OF OPERATIONS
Six Months Ended June 30, 1998 Compared to Six Months Ended June 30, 1997
Trinity's consolidated revenues for the six month period ended June 30, 1998
were $11,036,000 an increase of $3,815,000 compared to consolidated revenues of
$7,221,000 for the six months ended June 30, 1997. Included in product sales
for the six month period ended June 30, 1998 are sales of pregnancy tests in
the amount of $4,081,000 compared to sales of $3,277,000 for these tests during
the same period last year. This is due to the timing of shipments to the
Company's main pregnancy test customer. Of the pregnancy tests sold by Trinity,
approximately 85% was attributable to revenues of Trinity Biotech Inc. from
sales to Warner-Lambert and 15% were pregnancy tests sold by Trinity to the
professional markets.
Revenues for the six month period ended June 30, 1998 derived from the sale of
the Company's other products were $6,955,000 compared to $4,020,000 for the six
month period ended June 30, 1997. This increase in other product revenues is
due to the inclusion of the revenues of Centocor UK for the six months ended
June 30, 1998 together with the continuing expansion of sales of the Group's
rapid and laboratory test portfolio . Revenues from Centocor amounted to
$1,367,000 while revenues from Trinity's other products amounted to $9,669,000.
This includes revenues of $4,435,000 attributable to the operations of Clark
Laboratories which was acquired in 1997. Management expects that revenues of
all Trinity's product lines will continue to increase due to further regulatory
approvals, increased sales from our existing distribution network due to the
<PAGE> 3
acquisition of Clark and Centocor UK last year and the
recent product line acquisition from Diatech Inc.
Trinity also had interest and other income of $53,000 for the six month period
ended June 30, 1998 compared to $118,000 the same period the year before.
The gross margin from product sales for the six month period ended June 30,
1998 was 33% compared to 30% for the six month period ended June 30, 1997.
This increase is due to the increase in sales of the company's higher margin
tests. The gross margin on the sale of pregnancy tests to Warner Lambert was
15% and the margin on other products was 43%.
Administrative expenses for the six month period ended June 30, 1998 amounted
to $1,285,000 compared to $1,236,000 for the six month period ended June 30,
1997. The reason for the small increase in administrative expenses is the
inclusion of the administrative expenses of Centocor UK for the first three
months of 1998 prior to the closure of the UK facility. Included in
administrative expenses is an amount of $79,000, which represents royalties
payable on sales of the Company's pregnancy tests following the signing of a
Licence Agreement in 1996. Under US GAAP this amount would be classified under
"Cost of Sales". Research and development expenditure increased to $1,273,000
from $694,000 during the period. The increase is due partly to an increase in
resources allocated to research and development in Dublin and Jamestown and
also the fact that the research and development figure for the first 6 months
of 1997 was net of grants received of $190,000.
The net profit for the six month period ended June 30, 1998 was $1,004,000
compared to a net profit of $470,000 for the same period last year. In
addition, management expects that anticipated increases in revenues, control of
overheads and savings in overheads as a result of the rationalisation of the
costs of the new companies within the group, will result in further
improvements during 1998. However, there can be no assurance that Trinity can
increase the level of sales or reduce the level of overheads necessary to
sustain profitability.
LIQUIDITY AND CAPITAL RESOURCES
As of June 30, 1998 Trinity's consolidated cash and cash equivalents were
$1,099,000. This compares to cash and cash equivalents of $2,827,000 at
December 31, 1997. This decrease has been caused primarily by the cost of the
licencing of 5 cancer markers from Centocor Inc in quarter 1 amounting to
$1,000,000, the purchase of fixed assets relating to the Company's new Irish
facility and the repayment of some of the company's bank borrowings. These
outflows were ofset to some extent by additional bank borrowings. In addition
an increase in inventories and accounts receivable offset to some extent by a
decrease in accounts payable has resulted in a net cash outflow from operating
activities. The combination of these factors has resulted in net cash
outflows of $1,728,000 during the six month period.
In addition, the Company holds current investments, which stand at $1,469,000
at June 30, 1998. The Company does not anticipate capital expenditures in
excess of $750,000 over the next twelve months. Much of this expenditure will
relate to additional expansion of the Company's maufacturing facility's and
the purchase of new equipment required to automate the production of the
company's rapid and laboratory based tests.
Until cash flows from operations are sufficient to cover overheads, Trinity
will require additional financing and expects to rely on one or more of the
following sources for cash:
1. Cash generated from operations.
2. Further sales of listed investments.
3. Financial contributions made by strategic partners.
4. Exercise of warrants and stock options.
5. Issuance of stock in either private or public offerings.
<PAGE> 4
There can be no assurance that financing from the preceding sources will be
available at attractive terms or at all. The Company believes success in
raising additional capital or obtaining profitability will be dependent on the
viability of its products and their success in the market place.
IMPACT OF INFLATION
Although Trinity's operations are influenced by general economic trends,
Trinity does not believe that inflation has a material effect on its
operations for the periods presented.
IMPACT OF CURRENCY FLUCTUATION
Trinity's revenue and expenses are affected by fluctuations in currency
exchange rates especially the exchange rate between the US Dollar and the
Irish Pound. Trinity's revenues are primarily denominated in US Dollars, its
expenses are incurred principally in Irish Pounds and US Dollars. The
revenues and costs incurred by US subsidiaries are denominated in US Dollars.
EXCHANGE RATES
Fluctuations in the exchange rate between the Irish pound (as part of the
European Monetary System) and the U.S. dollar may affect the Company's
earnings, the book value of its assets and shareholders' equity as expressed in
Irish pounds and U.S. dollars and consequently may affect the market price for
the ADSs.
The following table sets forth certain information with respect to the Noon
Buying Rate of Irish pounds in terms of U.S. dollars as reported by the Federal
Reserve Bank of New York during the periods indicated.
PERIOD
<TABLE>
<CAPTION>
AVERAGE(1) HIGH LOW END
<S> <C> <C> <C> <C>
Fiscal period ended
February 28,
1991 1.6917 1.8390 1.5493 1.7460
1992 1.5884 1.7580 1.4585 1.6295
1993 1.6881 1.9028 1.4407 1.4785
1994 1.4486 1.5553 1.3550 1.4310
December 31,
1994 1.5200 1.6150 1.4075 1.5440
1995 1.6030 1.6575 1.5320 1.6002
1996 1.6063 1.6920 1.5515 1.6920
1997 1.5037 1.6927 1.4220 1.4220
June 30,
1998 1.3815 1.4310 1.3515 1.3930
</TABLE>
(1) The average represents the average of the Noon Buying Rates on the last
business day of each month during the period. On December 31, 1997 and
June 30, 1998 the Noon Buying Rates were $1.4220 = IRL.1 and US$1.xxxx =
IRL.1 respectively. For further information regarding the currency
translation policies of the Company, see Note 1 of the Notes to the
Consolidated Financial Statements.
<PAGE> 5
TRINITY BIOTECH PLC
UNAUDITED CONSOLIDATED BALANCE SHEET AS AT:
<TABLE>
<CAPTION>
DECEMBER 31, 1997 JUNE 30, 1998
US$ US$
(UNAUDITED)
<S> <C> <C>
ASSETS
Cash and cash equivalents 2,827,251 1,098,927
Short term investments 1,447,643 1,468,854
Accounts receivable and prepayments 7,899,177 7,640,959
Inventories 3,663,036 5,441,844
---------- ----------
Total Current Assets 15,837,107 15,650,584
Property, plant & equipment, net 5,800,169 7,290,290
Intangible assets, net 375,168 1,532,021
Financial assets 2,587,257 2,510,840
---------- ----------
TOTAL ASSETS 24,599,701 26,983,735
========== ==========
LIABILITIES & SHAREHOLDERS' EQUITY
Accounts payable & accrued expenses 8,767,479 8,825,842
Long term liabilities 8,727,511 9,332,664
SHAREHOLDERS' EQUITY
Called up share capital
Class 'A' ordinary shares 315,567 319,872
Class 'B' ordinary shares 9,954 9,660
Share premium account 35,055,338 35,435,508
Currency adjustment (63,125) 207,475
Retained deficit (5,937,107) (4,925,062)
Goodwill reserve (22,275,916) (22,222,224)
------------ -----------
Total Liabilities and Shareholders' Equity 24,599,701 26,983,735
============ ===========
</TABLE>
Note: The balance sheet at December 31, 1997 has been derived from the audited
financial statements at that date but does not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements.
See notes to condensed consolidated financial statements.
<PAGE> 6
TRINITY BIOTECH PLC
UNAUDITED CONSOLIDATED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
Six months ended June 30
1997 1998
US$ US$
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
REVENUES 7,220,863 11,035,720
---------- ----------
COSTS AND EXPENSES
Cost of goods sold (5,035,918) (7,377,797)
Selling, general and administrative (1,236,066) (1,285,194)
Research and development (693,896) (1,273,489)
Other operating income 195,225 -
---------- ----------
Operating profit 450,208 1,099,240
Interest and other income 117,622 53,508
Interest expense (97,690) (148,712)
---------- ----------
Profit before and after taxation 470,140 1,004,036
Loss attributable to minority interests - -
---------- ----------
Net Profit 470,140 1,004,036
========== ==========
Net profit per ordinary share 0.026 0.041
Weighted average number of ordinary shares outstanding 18,236,398 24,396,962
</TABLE>
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TRINITY BIOTECH PLC
UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS
SIX MONTHS ENDED JUNE 30
<TABLE>
<CAPTION>
1997 1998
US$ US$
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
Net cash flow from operating activities (1,123,608) (465,758)
Investing activities
Interest receivable 94,591 23,206
Purchase of subsidiary undertaking (1,460,264) -
Purchase of fixed assets (238,774) (1,237,180)
Sale of investments 40,220 -
Purchase of financial assets (348,388) -
Purchase of intangible assets - (1,156,853)
---------- ----------
(3,036,223) (2,836,585)
---------- ----------
Financing activities
Interest payable (47,280) (127,419)
Issue of ordinary shares 455,788 517,450
Capital element of loan repayments (526,014) (324,690)
Loans received 458,976 395,030
---------- ----------
341,470 458,881
---------- ----------
Increase (decrease) in cash and cash equivalents (2,694,753) (1,728,324)
Balance at beginning of period 4,395,034 2,827,251
---------- ----------
Balance at end of period 1,700,280 1,098,927
========== ==========
</TABLE>
<PAGE> 8
TRINITY BIOTECH PLC
NOTES TO THE UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PREPARATION AND ACCOUNTING POLICIES
The unaudited results for the six months to June 30, 1998 and June 30,
1997 have been prepared in accordance with Irish generally accepted
accounting principals. The accounting policies and the basis of
preparation of these unaudited results is consistent with those used in
the Group's Annual Financial Statements.
The information included in the interim consolidated financial statements
is unaudited but reflects all adjustments (consisting only of normal
recurring adjustments) which are, in the opinion of management, necessary
for a fair statement of the results for the interim periods presented.
The results for the six months to June 30, 1998 are not necessarily
indicative of the results for the full fiscal year.
2. ANALYSIS OF REVENUE AND OPERATING INCOME
a) The distribution of revenue by geographical area was as follows:
<TABLE>
<CAPTION>
Six months ended
June 30 June 30
1997 1998
US$ US$
<S> <C> <C>
U.S.A. 5,529,407 7,770,410
Central and South America 491,601 797,217
Asia 230,992 409,530
Europe 460,674 1,479,063
Africa 438,959 514,285
Ireland 69,230 65,215
--------- ----------
7,220,863 11,035,720
========= ==========
</TABLE>
b) The distribution of operating income by geographical area was as
follows:
<TABLE>
<CAPTION>
Six months ended
June 30 June 30
1997 1998
US$ US$
<S> <C> <C>
Ireland (158,833) (512,706)
United States 609,041 1,611,946
--------- ---------
Total operating income 450,208 1,099,240
========= =========
3. INVENTORIES June 30 June 30
1997 1998
US$ US$
Raw materials 1,358,088 2,995,251
Work in progress 979,540 1,242,091
Finished goods 608,126 1,204,502
--------- ---------
2,945,754 5,441,844
========= =========
</TABLE>
The replacement cost of inventory is not materially different from that
stated.
<PAGE> 9
TRINITY BIOTECH PLC
NOTES TO THE UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
4. DIFFERENCES BETWEEN IRISH AND US GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES
The Consolidated Financial Statements are prepared in accordance with
accounting principles generally accepted in the Republic of Ireland
("Irish GAAP"), which differ in certain significant respects from
accounting principles generally accepted in the United States ("US
GAAP"). These differences relate principally to the following items and
the necessary adjustments are shown in the table set out below;
(1) Stock Compensation:
For the purposes of the US GAAP reconciliation the Company has adopted
APB 25 in relation to the accounting for the issue of share options to
employees. The Company does not intend to change this accounting
treatment.
In contrast to Irish GAAP, US GAAP requires that the grant of share
options exercisable at prices per share less than the fair market value
of the shares at the time of grant of the options be accounted for as
compensation expense to be recognised over the related vesting period.
(2) Goodwill
Under Irish GAAP, goodwill may be either written off immediately on
completion of the acquisition against shareholders' equity, or
capitalised in the balance sheet and amortised through the income
statement on a systematic basis over its useful economic life. Under US
GAAP, accounting for goodwill as an offset against shareholders' equity
is not permitted; rather, goodwill must be amortised over the period of
its expected useful life, subject to a maximum write off period of 40
years, through the income statement. For the purposes of the
reconciliation a useful life of 10 years has been adopted for goodwill.
(3) Recognition of Escrow Income
Under Irish GAAP, the Company has recognised as revenue amounts due to be
released from an Escrow account in 1997. Under US GAAP such amounts are
not recognisable until received.
<PAGE> 10
TRINITY BIOTECH PLC
NOTES TO THE UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
4. DIFFERENCES BETWEEN IRISH AND US GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES (CONTINUED)
<TABLE>
<CAPTION>
ESTIMATED CUMULATIVE EFFECT ON June 30 June 30
SHAREHOLDERS' EQUITY 1997 1998
US$ US$
Total shareholders' equity before
<S> <C> <C>
Minority Interests under Irish GAAP 9,319,067 8,825,229
Estimated US GAAP adjustments:
Goodwill 13,082,233 17,299,946
Adjustment for amount due from escrow account (761,578) (1,250,000)
---------- ----------
Estimated shareholders' equity under US GAAP 21,639,722 24,875,175
---------- ----------
</TABLE>
<TABLE>
<CAPTION>
ESTIMATED EFFECT ON NET PROFIT (LOSS) June 30 June 30
1997 1998
US$ US$
<S> <C> <C>
Profit on ordinary activities after taxation
under Irish GAAP 470,140 1,004,036
Estimated US GAAP adjustments:
Goodwill amortisation (823,544) (910,523)
Compensation expense (84,728) (174,748)
Adjustment for amount due from escrow account (253,859) -
---------- ----------
Estimated loss under US GAAP (691,991) (81,235)
---------- ----------
Loss per ordinary share (0.04) (0.003)
---------- ----------
Weighted average number of ordinary shares outstanding 18,236,398 24,396,962
</TABLE>
5. CONTINGENT OBLIGATION
During 1995 the Company entered into a licence agreement which provided for the
payment of royalties on sales of the Company's pregnancy test. An amount of
$78,945 for the six months ended June 30, 1998 , is included in selling,
general and administration expenses for the fee. Under US GAAP the royalty
would be classified under Cost of Sales.
<PAGE> 11
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THE
REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORISED.
TRINITY BIOTECH PLC
DATE: August 25, 1998 BY: /s/ JONATHAN O'CONNELL
---------------------------
JONATHAN O'CONNELL
CHIEF FINANCIAL OFFICER
